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5916 N Lisbon St, Aurora, CO 80019
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BY: KEVIN VOLZ | INSURANCE AGENCY PRINCIPAL
After years of paying into a life insurance policy, the last thing any policyholder wants to deal with is a denied claim.
But unfortunately, life insurance claims are sometimes rejected by insurers. Reasons behind these denials can vary but usually have to do with technicalities in the policy or missing information.
Here are seven of the most common reasons why life insurance claims are denied in Colorado:
Let's take a more in-depth look at each of these reasons.
Here's how life insurance works: you pay premiums into a policy, and if you die while the policy is active, your beneficiaries receive a death benefit.
The death benefit can be used for anything but is often used to cover final expenses like funeral costs and outstanding debts.
In order to receive the death benefit, though, the cause of death must be covered in the policy.
For example, most natural causes of death like heart disease or cancer are typically covered. However, accidental deaths may not be covered unless you have added an accidental death rider to your policy.
Some policies also exclude death by suicide in the first year or two after the policy is purchased.
If the cause of death is not listed in the policy, the claim will likely be denied.
How To Mitigate This:
It's important that you understand your policy and what it covers. This way, there are no surprises if you need to make a claim down the road.
When you apply for life insurance, the insurer will require you to take a medical exam. The results of this exam, along with information from your medical records, will be used to determine your risk level.
Based on this information, the insurer will give you a rate and decide whether or not to insure you.
If you don't disclose a pre-existing condition on your application, the insurer may deny your claim if you die from that condition.
For example, let's say you have diabetes but don't disclose it on your life insurance application. If you later die from complications related to diabetes, the insurer may deny your claim based on this omission.
How To Mitigate This:
It's always better to be safe than sorry when it comes to life insurance. So if you're ever unsure about whether or not to disclose something, err on the side of caution and give your agent a call.
Most life insurance policies come with a waiting period, also known as a grace period. This is the time between when the policy is purchased and when it goes into effect.
During this waiting period, the policyholder is still technically covered, but any claims that are made will be denied.
For example, let's say you purchase a life insurance policy with a two-year waiting period. If you die within those first two years, your beneficiaries will not receive the death benefit.
How To Mitigate This:
The waiting period is an important part of any life insurance policy. Make sure you understand it before you purchase a policy, so that there are no surprises down the road.
If you don't make your life insurance payments, your policy will lapse. This means that it will no longer be in effect, and you will no longer be covered.
If you die while your policy is lapsed, your beneficiaries will not receive the death benefit.
How To Mitigate This:
It's important that you stay on top of your life insurance payments. If you know you're going to have trouble making a payment, reach out to your insurer and see if they can help.
If you don't list a beneficiary on your life insurance policy, the death benefit will go to your estate. This means that it will be subject to probate, which can take months or even years.
How To Mitigate This:
It's important that you list a beneficiary on your life insurance policy. This will ensure that the death benefit is paid out quickly and efficiently.
If the life insurance company finds that there was fraud involved in the application process, they may void the policy. This means that the policy will be null and void, and you will not be covered.
How To Mitigate This:
It's important that you are truthful on your life insurance application. If the life insurance company finds that you have lied, they may void your policy.
Most life insurance policies have a two-year waiting period for suicides. This means that if the policyholder dies from suicide within the first two years of the policy, the beneficiaries will not receive the death benefit.
How To Mitigate This:
If you're considering suicide, please seek help. There are plenty of resources available, and life is always worth living.
If you have any questions about
life insurance, please don't hesitate to reach out. We're here to help you find the right coverage for you.
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